How did Immigrants fare in the Irish Labour Market over the Great Recession

Abstract

Much research has been undertaken to study the effects of the Great Recession on overall labour market dynamics, but less is known about the impact on immigrants and how it has evolved over the business cycle. Understanding how immigrants were affected is particularly important for Ireland given the important role migrants play in the labour market. This paper attempts to fill this gap by identifying the labour market impact of the Great Recession on immigrants compared to natives and how this relationship has evolved since the downturn. In particular, we compare both groups’ likelihood of being employed and their risk of unemployment pre (2006), at the start of (2008) and during the depth of the employment crisis (2010 and 2012), and as the economy begun to recover (2014). In our analyses, we separately identify the impact of the recession on immigrants who have gained Irish citizenship through naturalisation, from those that retained their country of birth nationality. The main findings of the paper are twofold: i) The employment penalty suffered by immigrant workers, relative to native workers, increased significantly over the Irish recession and subsequent recovery. Differences in labour market outcomes between immigrants and natives were accentuated by the recession, when the employment penalty was the highest. The penalty narrowed in the recovery, although it remains higher than before the crisis; ii) The more recent evolution of the employment penalty appears to be related to a composition effect, as many refugee immigrants with weak labour market attachment became naturalised citizens during the recession. This suggests that the difficulties that some immigrants experience in the labour market would be under-estimated without taking due account of naturalisation processes, as is done in this paper for the first time in Ireland.